Decision Date: July 16, 2018
Link: Case Summary Document
Citation: [2018] ONSC 4147 (updated to 2019)
Acknowledgement:The Pemsel Case Foundation thanks The Australian Centre for Philanthropy and Nonprofit Studies for its contribution in the drafting of this Case Note.


This was an appeal by a charity, Canada Without Poverty (CWP), seeking a declaration that provisions of the Income Tax Act RSC 1985, c.1 (5th Supp.) (ITA) which restrict political activities of charities seeking to relieve poverty in Canada violated the Canadian Charter of Rights and Freedoms (the Charter). In particular, the contention was that section 149.1(6.2) of the ITA violated the right of freedom of expression in section 2(b) of the Charter.

Section 149.1(6.2) of the ITA provides:

For the purposes of the definition charitable organization in subsection 149.1(1), where an organization devotes substantially all of its resources to charitable activities carried on by it and

(a) it devotes part of its resources to political activities,

(b) those political activities are ancillary and incidental to its charitable activities, and

(c) those political activities do not include the direct or indirect support of, or opposition to, any political party or candidate for public office,

the organization shall be considered to be devoting that part of its resources to charitable activities carried on by it.

Section 149.1(6.2) thus restricts the extent of ‘political activities’ of registered charities to activities which are ‘ancillary and incidental’ to the overall charitable activities of a charity. In addition, such activities must be non-partisan. The Canada Revenue Agency (CRA) upholds these requirements in its taxation treatment of charities. CRA’s position is that political activity by charities, including political advocacy, must be connected to the charity’s purposes and constitute no more than 10% of the overall activities of the charity (CRA Policy Statement CPS-022)

CWP’s challenge to the nature of the relationship between the overall activities of a charity and its political activities led the court to consider the nature of the distinction between charitable and political activities. Did the 10% rule violate CWP’s Charter freedoms? Was CWP’s contention that the restriction meant that it could not engage appropriately in public advocacy – something fundamental to its concerns about relieving poverty – a permissible position for a charity to hold?

There is no definition of ‘political activities’ in section 149.1 of the ITA (the definition section). The court adopted an approach to the definition from political philosophy rather than from the common law. What was the basis of CWP’s political activities? It based its position on the global approach to poverty relief enunciated in the Copenhagen Declaration on Social Development 1995, an outcome of a United Nations sponsored meeting, the World Summit for Social Development (14 March 1995). The Declaration called for civil engagement by those living in poverty to assist their own development. This encompassed co-engagement in policy decisions by those living in poverty, and public advocacy for legislative and policy change by organisations supporting those living in poverty.

CWP argued that given the present underlying political philosophy relating to poverty alleviation, there should be no cogent distinction between political and charitable activities, and certainly no ‘10% rule’ enforced by the CRA. The CRA’s 2015 audit of CWP’s political activities found that most of CWP’s activities were ‘political’. This would have resulted in deregistration of CWP as a charity.

The court, grounding its reasoning in this political philosophy approach, held that the advocacy activities of CWP were ‘squarely within the charitable purpose of relief of poverty’ (at [41]), and that there was ‘no way to pursue [CWP’s] charitable purpose…whilst restricting its politically expressive activity to 10% of its resources’ (at [42]). The court then held that section 149.1(6.2)(a) and (b) violated section 2(b) of the Charter. Moreover, it was held that there was no basis for the infringement under section 1 of the Charter which allows infringements if there is a sufficient reason for the overriding legislation in question.

Therefore, the CWP was successful in obtaining a declaration that the restriction on its political activities imposed by the ITA was contrary to section 2(b) of the Charter (at [70]-[73]):

The interpretation and enforcement by the CRA of the “substantially all” requirement in section 149.1(6.2) of the ITA by limiting to 10% a charitable organization’s use of its resources for political activities, as set out in the CRA’s Policy Statement, violates s. 2(b) of the Charter and is not saved by s. 1. There shall be a Declaration to that effect and an Order that CRA cease interpreting and enforcing s. 149.1(6.2) in that way. There shall be a further Order that the phrase “charitable activities” used in s. 149.1(6.2) be read to include political activities, without quantum limitation, in furtherance of the organization’s charitable purposes. The Declaration and Orders described above render meaningless ss. 149.1(6.2) (a) and (b) of the ITA. As part of the freedom of expression encompassed by the above Declaration and Orders, there shall therefore be a further Declaration that ss. 149.1(6.2) (a) and (b) are of no force and effect pursuant to section 52(1) of the Constitution Act, 1982. The exclusion from “charitable activities” of partisan political activities contained in section 149.1(6.2) (c) of the ITA remains in force.

The case may be viewed at:

The UN World Summit for Social Development statement (the Copenhagen Declaration) can be viewed at:

The Report of the Consultation Panel on the Political Activities of Charities 2017 (referred to in the judgement as the position supported by the Parliament at [41]-[42]) – see particularly at Recommendation 1 – may be viewed at:

Implications of this case

The fall-out from this decision was considerable. On 15 August 2018, the Honourable Diane Lebouthillier, Minister of National Revenue, and the Honourable Bill Morneau, Minister of Finance, issued a joint statement on the Government of Canada’s commitment to clarify the rules governing the political activities of charities. They confirmed the Government would amend the Income Tax Act to implement changes consistent with recommendation no. 3 of the Report of the Consultation Panel on the Political Activities of Charities.

To move forward with its commitment, the Government released draft legislative proposals on 14 September 2018 with a 30-day public consultation period which would remove the existing quantitative limits on charities’ political activities, while still requiring that charities be operated for exclusively charitable purposes.

Taking into account feedback the Government received from stakeholders in response to the consultation on the draft legislative proposals, the Government revised its legislative proposals. The information released by the Government on 25 October 2018 proposed new measures which would allow a charity to carry out unlimited “public policy dialogue and development activities” in support of its stated charitable purposes. On 13 December 2018, Bill C-86, Budget Implementation Act, 2018, No. 2, which includes new rules to permit charities to carry on unlimited public policy dialogue and development activities (PPDDAs) in furtherance of a stated charitable purpose, received Royal Assent in Canada. PPDDAs generally involve seeking to influence the laws, policies or decisions of a government. A charity is still prohibited from partisan activities i.e. directly or indirectly supporting or opposing a political party or candidate for public office.

On 21 January 2019, the Canada Revenue Agency (CRA) issued the draft guidance document CG-027, Public policy dialogue and development activities by charities for public consultation. This document explains how the CRA expects to administer changes to the Income Tax Act that permit a charity to carry on unlimited PPDDAs in furtherance of a stated charitable purpose. Included are guidelines on what is direct and indirect support or opposition to a political party or candidate for public office.

On 31 January 2019, the federal government also withdrew its appeal against the court decision, which had been filed on 15 August 2018. The appeal was based on an alleged error of law in the decision, in that the government contended that the judge applied a test for religious freedom rather than freedom of expression. The government’s current position is that this contention is no longer worth pursuing.